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Kra Canal: Golden opportunity or commercially unviable?

February 23, 2019

extracted from ChannelNewsAsia, Singapore
The idea of digging a shipping canal through southern Thailand is not new, but it is gaining currency again because of China’s One Belt and One Road initiative. However there is stiff opposition to the Kra Canal project. 

BANGKOK: The Kra Canal has been making headlines in Thailand again after reports of renewed interest from several Chinese companies to develop the project.

The idea of digging a shipping canal through southern Thailand is not new, but it is gaining currency again because of China’s One Belt and One Road initiative.

Pakdee Tanapura has long advocated the Kra Canal. He dreams of a new shipping lane carved through southern Thailand that would connect the Indian Ocean and South China Sea – thus allowing shipping traffic to bypass the Strait of Malacca.

Mr Pakdee and the Kra Canal support group he belongs to say the project could become an important part of China’s Maritime Silk Road. And this could position Thailand as a key logistics player in the region.

“Right now we are not telling people that we want to dig the canal, but we would like a detailed study to be done,” said Pakdee Tanapura, member of the National Committee for the Study of the Kra Canal Project. “So that we can determine what are the economic implications.”

The idea for a canal – similar to the Suez or Panama canals – that cuts through the Kra Isthmus in southern Thailand has been around for centuries. It’s been mooted again as an alternative shipping route to the Strait of Malacca, which would cut travel time by several days, and compliment China’s One Belt and One Road initiative.

Some Chinese companies have expressed interest. Bolstered by their Thai lobbyist, who says the massive project at an estimated US$28 billion, will create jobs and business opportunities for millions over the next decade.

But some observers disagree. “It is a big challenge if you really think of actually digging the canal,” said Associate Professor Ruth Banomyong, Head of Department of International Business, Logistics and Transport, Thammasat University. “Because today we have to think about the environmental and social impact of a project of this scale. And when do you expect to see a return on the investment: In 10 years, 20 years or in 90 years?”

He added: “Commercially, it does not make sense. And this is why we have bridges. So instead of digging, why don’t we go across land?”


Successive Thai governments have wanted to create a gateway to the Indian Ocean. But its focus now is a massive deep-sea port, industrial estate and oil refinery on the outskirts of Dawei – a small town in Myanmar’s southern Tanintayi region, around 250km from Bangkok.

The Thai Government wants to develop the Dawei Special Economic Zone into a key industrial hub for Thailand in ASEAN and beyond.

“Our main focus in linking the two seas together is through the town of Dawei in Myanmar, where there will be a deep-sea port and a special economic zone,” said Arkhom Termpittayapaisith, Thai Transport Minister. “This will link to Thailand and connect with Laem Chabang port and the industrial zone in eastern Thailand. The idea here is to eventually link two industrial clusters together.”

“By extending this production network to Dawei, you can capture the new market within Myanmar itself,” said Newin Sinsiri, President of the Neighbouring Countries Economic Development Cooperation Agency. “And it is a potential for you to move beyond that to India, to South Asia, to Middle East and then European countries.”

Spanning nearly 200 sq km, the Dawei infrastructure project is expected to take 30 years to complete.

But mired in constant delays, the slow pace of Dawei’s transformation could mean the Kra Canal will continue to re-emerge as Thailand’s answer to becoming the world’s new maritime gateway.

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